The United States has added prominent Chinese firms Tencent and CATL to its list of businesses it claims are linked to China’s military, escalating an already fraught relationship between the world’s two largest economies. The designation, part of the Department of Defense’s Section 1260H list, now includes 134 companies accused of bolstering Beijing’s military capabilities through technology and innovation.
The inclusion of Tencent, a tech giant known for its popular WeChat messaging app, and CATL, the world’s largest battery maker, has sparked swift denials from both firms. Tencent called the move “clearly a mistake,” asserting it has no ties to military activities and that the listing would have no immediate impact on its business operations. CATL echoed this stance, stating it is not involved in military-related activities and criticized the decision as a violation of international trade principles.
The Pentagon’s list is intended to caution American businesses and organizations about the risks of engaging with listed entities, potentially paving the way for future sanctions by the US Treasury Department. While inclusion on the list does not impose immediate penalties, it signals heightened scrutiny and could deter partnerships with these firms.
Beijing has condemned the decision, with Chinese embassy spokesperson Liu Pengyu describing the move as “unreasonable suppression of Chinese companies” and a blow to global market competition and investment confidence.
The decision follows mounting pressure from US lawmakers who urged the Pentagon to include firms like CATL on the list, particularly as American automaker Ford announced a $2 billion investment to build a battery plant in Michigan using CATL technology. Ford has not commented on the developments.
Tencent’s shares dropped by 7% in Hong Kong trading, while CATL’s fell by 4%, reflecting investor concerns over potential long-term implications.
This move comes as the geopolitical rivalry between Washington and Beijing deepens, with US officials viewing China’s integration of civilian technology into its military as a strategic threat. The Pentagon has emphasized that the list aims to counteract China’s efforts to leverage private sector advancements for military gains.
The announcement also highlights ongoing legal disputes, as Chinese firms DJI and Hesai Technologies, previously designated on the list, have sued the Pentagon over their inclusion but remain on the updated roster.
With President-elect Donald Trump poised to return to the White House later this month, his administration’s historically hardline stance against China adds another layer of uncertainty to the already strained relations. The latest designations underscore the US’s continued efforts to confront China’s growing influence in technology and military sectors.
As tensions simmer, the fallout from these designations will likely ripple through global markets and further complicate the already precarious economic ties between the two superpowers.
